The Empirics of Enabling Investment and Innovation in Renewable Energy

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This working paper undertakes econometric analysis to assess the impacts of climate mitigation policies and the quality of the investment environment on investment and innovation in renewable power in OECD and G20 countries. It also assesses how countries’ investment environments interact with climate mitigation policies to influence investment and patent activity in renewable power. The authors gathered and tested data across OECD and G20 countries on more than 70 explanatory variables, which were analysed using two Poisson-family regression models: one to investigate determinants of investment flows in renewable power from 2000 until 2014 and one to investigate determinants of patent counts in renewable-power technologies from 2000 until 2012. Results of the econometric analysis are consistent with the main hypothesis in the paper that beyond setting climate mitigation policies, policymakers need to strengthen the general investment environment and align it with climate mitigation policies in order to mobilize investment and innovation in renewable power across OECD and G20 countries.